Blockchain: Do cryptocurrencies have the potential to revolutionize the real estate industry?

Anyone who invested USD 1,000 in Bitcoin five years ago can easily buy a nice apartment with that money today… and that is exactly what is happening: Bitcoin millionaires are increasingly investing their money in real estate.

The digital currency Bitcoin was invented in 2009 and enables fee-free transactions without the involvement of banks. Due to the steep price development, Bitcoin has experienced a real hype. Today, almost everyone knows the digital currency and it is increasingly accepted as a means of payment – even in the real estate market: in many places, apartments and houses can be bought with cryptocurrencies – this is also the case in Costa Rica. The blockchain can massively simplify processes and make them more secure.

Real estate remains the safest investment type and most of the time ensures a return on the investment. However, the capital required is often significant, so regular people is left out. Blockchain changes this as it enables fractional ownership through tokenization. Tokenization means assets get converted into many tokens which investors can buy individually and raise capital for future development.

When it comes to securing transactions, the blockchain generates private, certified digital identifiers, protecting against fraud. Compared to the traditional bank letter, this system offers a more up-to-date and reliable proof of capital. Buyers and sellers can store their data securely and verify it on the spot. The lengthy and often expensive interaction with banks is spared with the blockchain. Real estate could be equipped with an individual digital identifier that provides full information about the chain of ownership.

One major advantage of cryptocurrencies in real estate purchases is their low cost – even for cross-border transactions. Buyers can avoid high transfer and foreign exchange fees and purchase real estate in other parts of the world comparatively cheaply thanks to the blockchain.

Costa Rica is one of the world’s most crypto friendly countries. Cryptocurrencies are already accepted as means of payment and real estate transactions using cryptocurrencies are getting more and more popular as investors feel more comfortable with the technology.

If you have any questions, feel free to reach us at infocr@lexincorp.com.

Written by: Leonardo Alfaro, Paralegal.

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